Number of Downlaods: 10
Published Date: Jan 1, 2009
Karin Astrid SiegmannWorking
In 2005, Pakistan was the largest supplier of bed-linen to
the European Union (EU). The EU is Pakistan’s largest trading partner, with
textiles and clothing (T&C) accounting for almost two thirds of its sales
to the common market. In this
paper, a closer look is taken at the anatomy of and prospects for the trade
relationship between Pakistan and the EU, focusing on the T&C sector. It
reveals a contested relationship between Pakistan and the EU. ‘Carrots’ from
the side of the EU were granted in the form of trade preferences and catalysed
export growth. It was slowed down by the ‘stick’ of anti-dumping duties. Given
the strengthened position of competitors in the post-quota era combined with
structural weaknesses in the Pakistani T&C sector, i.e. mainly the lack of
investment in high value-added sub-sectors and in skill development, it is
questionable how sustainable this development is.
In future, Pakistan’s T&C industry will
either specialise in yarn and cloth production and loose significant market
shares in garments due to lack of competitiveness or it will climb up the
value-added chain and further shift its export composition towards made-ups
and, especially, garments. What would be the consequences of these scenarios?
If Pakistan puts up with its role as a major yarn and cloth producer, and accepts
that others do better – and cheaper – in garments manufacturing, this would
imply high costs in terms of industrial and social development of the country.
It is thus a highly undesirable future industrial pathway. Alternatively,
a setting that ensures Pakistan does not lose its market shares in garment
exports to the EU strengthens the trade-development bond. However, it requires
a joint effort by the Government of Pakistan, the industry and its trading
partner EU. The main challenge, therefore, is to promote skill development at
all levels of the industry. In the garment sector, this does not only involve
managerial and technical staff, but also staff at the level of operators.